Submitted on Briefs: April 9, 2014
Amended: August 20, 2014
District Court of the Fifth Judicial District, In and For the County of Madison, Cause No. DV-29-2007-5 Honorable Loren Tucker, Presiding Judge
For Appellants: Anne Blanche Adams; Cederberg Law Offices, P.C.; Missoula, Montana for 395 Lampe, LLC Mark H. Gunderson; Austin K. Sweet, Catherine A. Reichenberg; Gunderson Law Firm; Reno, Nevada for 395 Lampe, LLC John C. Doubek, Patrick T. Fox; Doubek, Pyfer & Fox, LLP; Helena, Montana for Timothy Blixseth and Overlook Partners, LLC Rebecca Pape; Pape & Griffith, PLLC; Bozeman, Montana for Timothy Blixseth and Overlook Partners, LLC
For Appellee: Robert K. Baldwin; Trent M. Gardner; Goetz, Baldwin & Geddes, P.C.; Bozeman, Montana
Beth Baker Justice
¶ l Timothy Blixseth, Overlook Partners, LLC, and 395 Lampe, LLC, appeal an order of the Fifth Judicial District Court granting summary judgment to Greg LeMond. LeMond cross-appeals. Although the parties raise numerous contentions, we restate the dispositive issues as follows:
¶ 2 1. Whether the District Court erred when it dismissed Blixseth from this action.
¶ 3 2. Whether Overlook Partners and Lampe obtained their interests in the Overlook Lots subject to the outcome of LeMond's claim against Yellowstone Development.
¶ 4 3. Whether Overlook Partners or Lampe may challenge the stipulations between LeMond and Yellowstone Development's bankruptcy trustee.
¶ 5 4. Whether the District Court properly exercised its equitable powers in the entry of its final judgment.
¶ 6 We affirm in part, reverse in part, and remand.
PROCEDURAL AND FACTUAL BACKGROUND
¶ 7 This case involves a property dispute at the Yellowstone Mountain Club, a private ski and golf resort in Madison County. LeMond owned property at the Yellowstone Mountain Club and sought to purchase an adjacent property, Lot 11, from its owner, Yellowstone Development. Negotiations between LeMond and Yellowstone Development began in 1999 or 2000. Blixseth represented Yellowstone Development in the negotiations.
¶ 8 Blixseth sent an e-mail on behalf of Yellowstone Development on September 21, 2000. The e-mail stated, "The deal is that if Greg brought in 10 people who bought at the club, he would receive the lot." The e-mail continued, "We did reach agreement that if after 5 years he had brought in less than the 10, he could pay the difference at the rate of $100, 000 per person." LeMond maintains that the e-mail memorialized an oral contract for the purchase of Lot 11 from Yellowstone Development for $1, 000, 000. The contract provided that LeMond would receive an offset of $100, 000 for each new member whom LeMond was able to "bring in" to the Yellowstone Mountain Club. The offset was allowed up to the amount of the entire purchase price, so LeMond would receive the property without paying any money if he brought in ten new members.
¶ 9 Blixseth acknowledged that he engaged in negotiations on behalf of Yellowstone Development to this effect, but denied that a contract was ever created. The e-mail also stated that Blixseth wanted to "try to get [a contract] put together in the near future." Later communications between Blixseth and LeMond occurred, but there was never a formal contract signed by both parties. LeMond engaged in various subsequent efforts to promote the Yellowstone Mountain Club. He claims that these efforts fulfilled his obligations under the alleged contract.
¶ 10 Yellowstone Development discovered that various civil engineering and entitlement issues likely rendered Lot 11 undevelopable. To remedy this, Yellowstone Development combined Lot 11 with twenty-three acres of additional undeveloped property in December 2005. The new, larger property was replatted as Lot 11 A. In March 2006, Yellowstone Development traded Lot 11A to YSC, LLC, in exchange for Lot 102A, and subsequently subdivided Lot 102A into five new lots. These lots were named the Overlook Lots. In an affidavit, Blixseth claimed that the original Lot 11 was 5.09 acres and the total acreage of all five Overlook Lots is 28 acres.
¶ 11 LeMond filed his first complaint on January 23, 2007, against Yellowstone Development, Yellowstone Mountain Club, and Blixseth Group, Inc. On June 14, 2007, LeMond amended his complaint to add several claims, including unjust enrichment and the creation of a constructive trust. LeMond argued, among other things, that Yellowstone Development was under an equitable duty to convey the Overlook Lots to LeMond based on its failure to covey Lot 11 pursuant to the contract. On the same day, LeMond filed a Notice of Lis Pendens on the Overlook Lots to notify potential purchasers of his constructive trust claim for title to the Overlook Lots. LeMond filed a second amended complaint on August 17, 2007, adding Blixseth individually as a party.
¶ 12 On September 17, 2007, LeMond filed a motion for partial summary judgment on the issue whether a contract existed. Meanwhile, Yellowstone Development moved to expunge LeMond's lis pendens. Following a hearing, both motions were denied in open court on April 14, 2008.
¶ 13 Blixseth and a partner formed Overlook Partners in March 2008 for the purpose of purchasing the Overlook Lots from Yellowstone Development. Overlook Partners bought the Overlook Lots for $15, 000, 000 on April 3, 2008. The deed conveying the Overlook Lots from Yellowstone Development to Overlook Partners stated that the conveyance was "SUBJECT, HOWEVER" to LeMond's lis pendens and claim for title to the Overlook Lots against Yellowstone Development. After the purchase, Blixseth personally held a promissory note made by Overlook Partners for $15, 000, 000, which was secured by a mortgage on the Overlook Lots. Blixseth later assigned the note and the mortgage to Lampe.
¶ 14 In November 2008, both the Yellowstone Mountain Club and Yellowstone Development filed for bankruptcy in the U.S. Bankruptcy Court for the District of Montana. The bankruptcy proceedings were consolidated. On February 9, 2009, due to the bankruptcy, the District Court stayed the proceedings in this case. LeMond filed a claim in the consolidated bankruptcy action for $15, 000, 000 based on the alleged breach of the Lot 11 contract. On March 20, 2009, Overlook Partners filed a claim in the bankruptcy action, asserting that it owned the Overlook Lots and that Yellowstone Development was obligated to defend and indemnify it against LeMond's claim.
¶ 15 On June 2, 2009, the Bankruptcy Court adopted the Third Amended Plan of Reorganization. This plan called for the creation of the Yellowstone Club Liquidating Trust (YCL Trust) to manage the assets of Yellowstone Development and Yellowstone Mountain Club in bankruptcy. YCL Trust is the successor in interest to Yellowstone Development and Yellowstone Mountain Club. YCL Trust is responsible for liquidating the assets in and managing claims against the Yellowstone Development and Yellowstone Mountain Club bankruptcy estates.
¶ 16 On January 26, 2010, YCL Trust and LeMond filed a stipulated motion in the bankruptcy action (referred to in this Opinion as the "Bankruptcy Stipulation") to settle LeMond's claim against Yellowstone Development. YCL Trust determined that LeMond's claim should be allowed in the amount of $650, 000 and agreed to lift the bankruptcy stay to allow LeMond to pursue title to the lots in the District Court action. YCL Trust stipulated that a contract for the sale of Lot 11 to LeMond existed, but YCL Trust retained the right to defend against LeMond's claim in the District Court at its discretion. The bankruptcy court accepted the stipulation on June 15, 2010.
¶ 17 On November 2, 2010, the U.S. District Court for the District of Montana reversed and remanded the Third Amended Plan of Reorganization in the appeal from the bankruptcy court. Meanwhile, in the recently rekindled action before the District Court, YCL Trust decided not to contest LeMond's claim. On November 24, 2010, YCL Trust and LeMond filed a stipulated motion for entry of judgment in the District Court. Once again, YCL Trust stipulated to the existence of a contract with LeMond. This time, however, YCL Trust additionally stipulated to the existence of a constructive trust in favor of LeMond for the Overlook Lots and stipulated that LeMond's claim took priority over any claims arising after June 14, 2007, because of the lis pendens. For the sake of clarity, this stipulated motion before the District Court is referred to in this opinion as the "Constructive Trust Stipulation." The District Court entered judgment on the same day the motion was filed, awarding LeMond a constructive trust to the Overlook Lots.
¶ 18 On January 21, 2011, Blixseth filed a motion for relief from the judgment pursuant to M. R. Civ. P. 60(b). On April 4, 2011, the District Court denied the Rule 60(b) motion. LeMond filed a fourth amended complaint on April 28, 2011, alleging a single count of quiet title to the Overlook Lots. LeMond added Lampe and Overlook Partners as defendants, but did not include Blixseth Group, Inc. Blixseth, individually, and Overlook Partners filed counterclaims against LeMond. On June 5, 2012, LeMond moved for summary judgment on his quiet title claim against Overlook Partners and Lampe, arguing that the lis pendens barred the defendants from receiving title. ...